Operations MGT Intro

1.
Pearson Education Ltd. Arnos Design
Chapter 1
Operations management
Slack, Chambers and Johnston, Operations Management, 6th Edition,

1.1
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
Key operations questions
1.2
In Chapter 1 – Operations management – Slack et. al.

identify the following key questions:
•What is operations management?

•Why is operations management important in all
types of organization?
•What is the input–transformation–output process?
•What is the process hierarchy?
•How do operations processes have different
characteristics?
•What are the activities of operations management?
1.2
Operations management defined
1.3
Operations management is the activity of

managing the resources which are devoted
to the production and delivery of products
and services.

1.3
Slack et al.’s model of operations management
1.4
Operation’s
Transformed performance
resources Operations
•Materials Operations
strategy strategy
•Informatio
n
•Customer Operations
s management Output
Input Design Improvement
resources products and Customers
services
Planning and
Transforming control
resources
•Facilities
•Staff

1.4
Operations management is fashionable!
1.5
The consultancy services market – % of world

revenues of 40 largest consultancy firms
Financial Marketing/sales
6 2
Organizational
design
Operations and process
11
management
31
Benefits/Actuarial
16
IT strategy Corporate strategy

17 17

1.5
Operations management at IKEA
1.6
Design a store layout

Design elegant which gives smooth Ensure that the jobs
products which can be and effective flow of all staff encourage
flat-packed efficiently their contribution to
business success
Site stores of an Continually examine

appropriate size in and improve
the most effective operations practice
locations
Maintain
cleanliness and Monitor and enhance
safety of storage Arrange for fast quality of service to
area replenishment of customers
products

1.6
They are all operations
1.7
Back office Kitchen unit

operation in a bank manufacturing
operation
Take-out / restaurant
operation

1.7
Operations are everywhere
1.8
Every service you consumed today (radio station, bus

service, lecture, etc.) has also been produced by an
operation.
The best way to start understanding the nature of

‘Operations’ is to look around you.
Everything you can see around you (except the flesh and
blood) has been produced by an operation.
Operations Managers create everything you buy, sit on,

wear, eat, throw at people and throw away.

1.8
The three basic functions of enterprises
1.9
Product / Digital Stock
Service
Development
Marketing Operations
Pearson
Education Ltd.
Lord and Ford Motor
Leverett Company

1.9
1.10 Interfunctional relationships between operations
and other functions
Engineering/ Product/service
technical Understanding of
the capabilities and development
function constraints of the function
operations process
Analysis of new
technology options Understanding of
process technology
needs New product and
Accounting service ideas
and finance Provision Understanding of the
of relevant capabilities and
function data
Operations constraints of the
Financial analysis function operations process
for performance
and decisions Market
requirements Marketing
Understanding of function
human resource needs Understanding Provision of systems for
of infrastructural design, planning and
Recruitment and system control, and improvement
development needs
and training
Human Information
resources technology
function (IT) function

1.10
Prêt a Manger
1.11
‘High-end’ sandwich and snack retailer
Use only ‘wholesome’ ingredients

All shops have their own kitchens where fresh sandwiches
are prepared every day
Fresh ingredients are delivered early every morning
Same staff who serve you at lunch made the sandwiches

that morning
‘We don’t work nights, we wear jeans, we party…’

1.11
The three basic functions at Prêt a Manger
1.12
Nutritional ‘mechanical’
and aesthetic design of
the sandwiches and
snacks
Product/
Service
development
Design, location
and management
Marketing Operations
of stores and in-
store processes
Promotional and the network
activities, that supplies them
market
research, etc.

1.12
Operations management in all types of organization
1.13
Automobile assembly factory – Operations

management uses machines to efficiently
assemble products that satisfy current
customer demands

1.13
Operations management in all types of organization (Continued)
1.14
Physician (General practitioner)

– Operations management uses
knowledge to effectively diagnose
conditions in order to treat real
and perceived patient concerns

1.14
1.15
Management consultant – Operations

management uses people to effectively
create the services that will address
current and potential client needs

1.15
1.16
Disaster relief
charity – Operations
management uses
ours and our partners’
resources to speedily
provide the supplies
and services that
relieve community
suffering

1.16
1.17
Advertising agency – Operations

management uses our staff’s knowledge
and experience to creatively present
ideas that delight clients and address
their real needs

1.17
Operations management uses…
1.18
machines to efficiently assemble products
diagnose to treat real and

knowledge to effectively perceived patient
conditions
concerns
people to effectively create services that will

address current and
potential client
needs
ours and our to speedily provide supplies and

partners’ services that relieve
resources community suffering
our staff’s to creatively present ideas that delight

knowledge and clients and address
experience their real needs

1.18
Operations management is changing
1.19
The business environment is Prompting operations responses, for

changing, for example: example:
• Increased cost-based competition •Globalization of operations networking
• Higher quality expectations •Information-based technologies
•Internet-based integration of operations
• Demands for better service activities
• More choice and variety •Supply chain management
•Customer relationship management
• Rapidly developing technologies
•Flexible working patterns
• Frequent new product/service •Mass customization
introduction
•Fast time-to-market methods
• Increased ethical sensitivity •Lean process design
• Environmental impacts are more •Environmentally sensitive design
transparent •Supplier ‘partnership’ and development
•Failure analysis
• More legal regulation
•Business recovery planning
• Greater security awareness

1.19
All operations are input–transformation–output processes
1.20
Inputs Transformation process Outputs

1.20
Operations input resources and outputs
1.21
Transformed
resources
•Materials
•Informatio
n
•Customers
Input Output
resources
Transformation process products and Customers
services
Transforming
resources
•Facilities
•Staff Outputs are products and services
that add value for customers

1.21
Inputs and outputs at Prêt a Manger
1.22
Transformed
resources
•Ingredient
s
•Packaging
•Customer
s
Input Served and
resources satisfied Customers
customers
Transforming
resources
•Equipment
•Fittings
•Staff

1.22
Example of analysis at three levels
1.23
The supply network – Flow between operations
Studios Promotion A programme

agency
and video
Casting Broadcasting supply network
agency company
Programme/
video
Creative maker
agency
The operation – Flow between processes

The
programme
and video
operation

1.23
Most operations produce products and services
1.24
Pure products –
Crude oil production
Outputs that are
Acme Whistles exclusively tangible
Aluminium smelting
Specialist machine tool

production Mixture of products and
Prèt a Manger services – Outputs that
Restaurant are a mixture of the
tangible and intangible
IKEA
Information systems
provider
Management consultancy
Pure services –
Mwagusi Safari
Outputs that are
Psychotherapy clinic Lodge
exclusively intangible
1.24
Operations can be analyzed at three levels
1.25
Flow between operations
The level of the supply network
Flow between processes
The level of the operation
The level of the process

Flow between resources

1.25
Operations can be analyzed at three levels (Continued)
1.26
Flow between operations Operations management is

concerned with the flow of
transformed resources
between operations,
processes, where
Flow between processes
External operations interact

with internal processes to form
the external supply network
Processes form an internal

‘supply network’ and
become each others
Flow between resources customers and suppliers

1.26
Example of analysis at three levels (Continued)
1.27
Programme
and video
maker

Engineer
-ing
Marketing Finance and Production Post

and sales accounting unit production
Set and props

manufacture
The programme and video operation

1.27
Example of analysis at three levels (Continued)
1.28
Programme
and video
maker
Set and props

manufacture
The ‘Set and Set

construction
props Set Set
manufacturing’ design Props finishing
process acquisition

1.28
1.29 The television and video company divided into
two ‘end-to-end’ business processes
End-to-end process for programme production

Engineering
Programme
marketing and Programme finance Programme Programme
sales and accounting production unit post
Programme and
Programme set and
production
video maker
props manufacture
End-to-end process for music video production

Music video
finance and
Music video accounting
marketing and Music video Music video
sales production post
Music video set unit production
and props
manufacture

1.29
All functions use processes to provide service
1.30
Human
resources
Operations
Marketing
Information
systems
Finance Sales
o r g an iz
iz a tio
tio n uses
EveryAny
part oforganization
any
d u c e p r o d u cttss or
processes ttoo pro al or
s f
foo r e x te r n
ervice
(usually) s r n a l c u stomers
(usually) int e
Pearson Education Ltd. Naki Kouyioumtzis

1.30
1.31 Differences within sectors are often greater than the
differences between sectors
Financial services
An account Financial analyst
management centre at advising a client at an
a large retail bank investment bank
Pearson Education Ltd. MindStudio
Furniture manufacturing
Mass production of Craft production of

kitchen units reproduction
‘antique’ furniture
Pearson Education Ltd. Rob Judges

Hotels
Value-for-money Lobby of an
hotel international
luxury hotel
Photodisc. Life File. Emma Lee Photodisc. Photolink. Jack Star

1.31
A typology of operations and processes
1.32
The 4 Vs
Low Volume High

High
High Variety Low
High Variation in demand Low
High Visibility Low

1.32
A typology of operations and processes (Continued)
1.33
The implications of high and low Volume in operations and

processes
Implications Implications
•Low repetition
•Each staff member Low Volume High •High
performs more of repeatability
each task •Specialization
•Less systemization •Capital
•High unit costs intensive
•Low unit costs

1.33
1.34
The implications of high and low Variety in operations and

processes
Implications
•Flexible
•Complex Implications
•Match
customer •Well defined
needs High Variety High
Low •Routine
•High unit •Standardized
costs •Regular
•Low unit costs

1.34
1.35
The implications of high and low Variation in operations and

processes
•Changing •Stable
capacity Variation in
High High
Low •Routine
•Anticipation demand
•Predictable
•Flexibility
•High
•In touch with utilization
demand •Low unit costs
•High unit
costs

1.35
1.36
The implications of high and low Visibility in operations and

processes
•Short waiting •Time lag
tolerance High Visibility High
Low between
•Satisfaction production and
governed by consumption
customer •Standardizatio
perception n
•Customer •Low contact
contact skills skills
needed •High staff
•Received variety utilization
is high •Centralization
•High unit costs •Low unit costs
1.36
A 4 Vs profile of two operations
1.37
Low Volume High
High Variety Low
High Variation Low
High Visibility Low

Mwagusi Formule 1
Safari Lodge Hotel
Important to understand how different operations are
positioned on the 4 Vs.
Is their position where they want to be?
Do they understand the strategic implications?

1.37

Operations MGT Intro

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1.

Pearson Education Ltd. Arnos Design

Slack, Chambers and Johnston, Operations Management, 6th Edition,

In Chapter 1 – Operations management – Slack et. al.

•What is operations management?

Operations management is the activity of

Slack, Chambers and Johnston, Operations Management, 6th Edition,

Slack, Chambers and Johnston, Operations Management, 6th Edition,

The consultancy services market – % of world

IT strategy Corporate strategy

Slack, Chambers and Johnston, Operations Management, 6th Edition,

Design a store layout

Site stores of an Continually examine

Slack, Chambers and Johnston, Operations Management, 6th Edition,

Back office Kitchen unit

Slack, Chambers and Johnston, Operations Management, 6th Edition,

Every service you consumed today (radio station, bus

The best way to start understanding the nature of

Operations Managers create everything you buy, sit on,

Slack, Chambers and Johnston, Operations Management, 6th Edition,

Product / Digital Stock

Slack, Chambers and Johnston, Operations Management, 6th Edition,

Slack, Chambers and Johnston, Operations Management, 6th Edition,

‘High-end’ sandwich and snack retailer

Use only ‘wholesome’ ingredients

Same staff who serve you at lunch made the sandwiches

Slack, Chambers and Johnston, Operations Management, 6th Edition,

Slack, Chambers and Johnston, Operations Management, 6th Edition,

Automobile assembly factory – Operations

Slack, Chambers and Johnston, Operations Management, 6th Edition,

Physician (General practitioner)

Slack, Chambers and Johnston, Operations Management, 6th Edition,

Management consultant – Operations

Slack, Chambers and Johnston, Operations Management, 6th Edition,

Slack, Chambers and Johnston, Operations Management, 6th Edition,

Advertising agency – Operations

Slack, Chambers and Johnston, Operations Management, 6th Edition,

machines to efficiently assemble products

diagnose to treat real and

people to effectively create services that will

ours and our to speedily provide supplies and

our staff’s to creatively present ideas that delight

Slack, Chambers and Johnston, Operations Management, 6th Edition,

The business environment is Prompting operations responses, for

Slack, Chambers and Johnston, Operations Management, 6th Edition,

Inputs Transformation process Outputs

Slack, Chambers and Johnston, Operations Management, 6th Edition,

Slack, Chambers and Johnston, Operations Management, 6th Edition,

Slack, Chambers and Johnston, Operations Management, 6th Edition,

The supply network – Flow between operations

Studios Promotion A programme

The operation – Flow between processes

Slack, Chambers and Johnston, Operations Management, 6th Edition,

Specialist machine tool

Flow between operations

The level of the supply network

Flow between processes

The level of the operation

The level of the process

Slack, Chambers and Johnston, Operations Management, 6th Edition,

Flow between operations Operations management is

External operations interact

Processes form an internal